Money Laundering Risk Rises in Annual Index of Countries

Iranian President Hassan Rouhani speaks in a session of parliament to debate his proposed cabinet on Tuesday in Tehran.
Photo:
Associated Press

The average risk of money laundering has risen in the past year, according to the latest edition of the Basel AML Index, an annual ranking of countries assessing their money laundering risk.

There has beenlittlechangesince the index’s inception in 2012 in the countries posing the highest money-laundering risk, but the 2017 edition found that the average country risk level deteriorated, the Basel Institute on Governance said Wednesday. The global average of the 146 countries studied on a zero-to-10 scale rose to 6.15, up from 5.85 last year, the index found.

To assess a nation’s money-laundering risk, the AML index assigns each country a score based on a framework that aggregates and weights data from sources such as the World Bank, the Financial Action Task Force and the World Economic Forum. High scores indicate a country is more vulnerable to money laundering; the Basel Institute stresses, though, that the index does not assess the actual amount of illicit financial funds flowing through a country.

“Although a majority of countries legally comply with current [anti-money laundering and counter-terrorism financing] standards, most continue to fall (sometimes severely short) in terms of effective implementation and enforcement of these laws,” the Swiss-based organization said in the statement.

Once again, according to the index, Iran was the highest-risk country, followed by Afghanistan, Guinea-Bissau, Tajikistan and Laos. Jamaica, Tunisia, Hungary, Uzbekistan and Peru were the countries that deteriorated the most. Sudan and Myanmar, two countries previously ranked among the highest risk, improved enough to drop out of the top 10. The lowest-risk countries were Finland, Lithuania, Estonia, Bulgaria and New Zealand.

Iran’s ranking comes as the country tries again to reform its banking sector, according to local media reports. The FATF, a Paris-based international anti-money-laundering standards body, which has long blacklisted Iran for anti-money-laundering and terrorism-financing failures, said in June that it would continue a suspension of certain countermeasures on Iran while Tehran works on banking-sector reforms.

The release of the Basel index comes on the heels of a study of European criminal codes by anti-money laundering and sanctions-screening firm FortyTwo Data, which found that Belgium imposes the shortest prison term for violating money-laundering laws. The maximum sentence for money laundering in Belgium is five years, compared with 30 years in Bulgaria, 14 years in the U.K., and 10 years in France and Germany.

FortyTwo Data said the disparity in sentencing strikes at the heart of the European Union’s fractured processes against money laundering and terrorism in the bloc, noting that Belgium has become a hotbed for terrorism in recent years.

“It is remarkable and deeply concerning that such weak sentencing powers are found in a country that has acted as a staging post for international terror…Money laundering is a major part of the criminal toolkit used by organized crime and extremists,” said Julian Dixon, chief executive of FortyTwo Data, in a statement.

Write to Samuel Rubenfeld at Samuel.Rubenfeld@wsj.com. Follow him on Twitter at @srubenfeld.